Maryland Buyers Guide

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Maryland Accessory Dwelling Unit (ADU) Buying Guide

Updated as of August 2025

This free guide is designed to help homeowners, buyers, and investors navigate the process of purchasing, building, or adding an Accessory Dwelling Unit (ADU) in Maryland. ADUs—also known as granny flats, in-law suites, or backyard cottages—are secondary living spaces on a single-family property. They can be attached (e.g., basement apartment) or detached (e.g., standalone cottage). This guide focuses on state-level rules and key local variations, but always consult your local zoning office for site-specific details.

1. What is an ADU?

An ADU is a self-contained residential unit located on the same lot as a primary single-family home. It includes its own kitchen, bathroom, and sleeping area. In Maryland, ADUs are increasingly popular for providing affordable housing options, generating rental income, or accommodating family members. They differ from short-term rentals (e.g., Airbnb) and must comply with long-term occupancy rules in most areas.

Key Types of ADUs in Maryland:

• Attached ADU: Built within or added to the main house (e.g., converted garage or basement).
• Detached ADU: Standalone structure in the yard.

2. Benefits of Buying or Building an ADU in Maryland

• Income Potential: Rent out the ADU for supplemental income (average $1,500–$3,000/month in suburban areas like Montgomery County).
• Family Support: House aging parents, adult children, or caregivers without separate properties.
• Property Value Boost: ADUs can increase home value by 20–30% in high-demand areas.
• Affordable Housing Solution: Addresses Maryland's housing shortage; state incentives may apply.
• Tax Advantages: Potential deductions for home office use or rental depreciation (consult a tax advisor).
• Sustainability: Smaller units promote efficient land use and can include eco-friendly features like solar panels.

3. Maryland State Regulations for ADUs (As of 2025)

Maryland has made significant strides in promoting ADUs through recent legislation. In 2025, House Bill 1466 (HB1466) and Senate Bill 891 (SB891), known as the Small Houses Act of 2025, were signed into law on April 22, 2025, and effective October 1, 2025. These bills mandate that charter counties and Baltimore City adopt local laws by October 1, 2026, allowing ADUs "by right" on single-family detached dwelling lots, reducing barriers. This means no special use permits are needed if basic standards are met, though local variations exist.

Key State Requirements:

• Permit Process: Obtain an ADU permit from your locality (fees vary, but state promotes affordability).
• Size Limits: Typically up to 1,200 sq ft on lots greater than one acre, or 800 sq ft on smaller lots; cannot exceed 50% of the primary home's size in some cases.
• Setbacks and Design: ADUs must match the primary home's style; minimum setbacks of 3 feet from neighboring properties.
• Occupancy: Limited to long-term rentals (no short-term like Airbnb unless locally allowed). No affinity requirements (e.g., must be family) in most cases post-2025 updates.
• Utilities and Parking: Share utilities with the main home; off-street parking may be required (1–2 spaces), though some localities are waiving this.
• Building Codes: Must comply with Maryland Building Performance Standards (MBPS), including energy efficiency and accessibility standards.

Recent Changes (2024–2025): The ADU Task Force recommendations led to HB1466/SB891, preempting local restrictions and facilitating ADU development for housing supply. Localities must align by 2026, with updates in places like Rockville and Washington County.

4. Local Variations in Maryland

Regulations vary by city/county—check your local zoning ordinance via the municipal website or office.

• Montgomery County: Allowed in most residential zones; detached ADUs on lots of at least one acre; administrative guidelines updated in 2025 for easier approvals.
• Prince George's County: Currently prohibited, but state mandate requires changes by 2026; potential supplements to Missing Middle housing policies.
• Baltimore City/County: Size up to 1,200 sq ft on larger lots, 800 sq ft on smaller; by-right in many zones post-2025 updates.
• Harford County: Reviewing regulations amid community concerns; minimum 3 ft setbacks emphasized.
• Washington County: Permitted by right in certain zones; ordinance amendments in 2025 for ADUs.
• Rockville: Attached ADUs allowed since 2024; conditional use approvals phased out by April 2025.

For your area, use tools like Maryland's Department of Planning resources or contact the Department of Housing and Community Development.

5. Costs of Buying or Building an ADU in Maryland

• Prefabricated ADUs: $85,000–$175,000 (e.g., modular units from companies like Maryland MicroNest). Quick install (weeks).
• Custom-Built: $100,000–$300,000+ (includes permits, site prep, utilities).
• Conversion (e.g., Garage): $20,000–$100,000.
• Additional Fees: Permits ($500–$1,500), inspections ($500–$1,000), utilities hookup ($5,000–$20,000 if septic/well needed).
• ROI Timeline: 3–5 years via rentals, depending on location.

6. The Buying/Building Process

• Research Zoning: Confirm ADU allowance via local planning department.
• Design and Plans: Hire an architect or use pre-approved designs (some localities offer templates).
• Permits: Submit application with site plans; approval in 30–60 days.
• Financing: Options include home equity loans, HELOCs, or Maryland Housing grants for low-income projects.
• Construction: Hire licensed contractors; timeline 2–6 months.
• Inspections and Occupancy: Final checks for code compliance.
• Rental Setup: If renting, get landlord insurance and comply with Maryland Residential Landlord and Tenant Act.

Tips for Buyers: When purchasing a property with an existing ADU, verify permits and inspections. For new builds, consider pre-fab for speed.

7. Financing and Incentives

• Loans: FHA 203(k) for renovations including ADUs; conventional loans up to 100% LTV; FHA allows 75% of estimated ADU rental income for qualification.
• Grants/Tax Credits: State programs offer up to $50,000 per unit for qualified ADUs; federal energy credits for green ADUs; income-based incentives for tenants.
• Local Incentives: Some counties offer fee waivers or density bonuses; ADU Task Force supports affordability measures.

8. Common Challenges and Solutions

• HOA Restrictions: If in an HOA, check covenants (state law may override post-2025).
• Septic/Well Issues: Rural areas require Health Department approval.
• Neighbor Concerns: Address privacy with landscaping.
• Short-Term Rentals: Restricted in many areas; focus on long-term.

9. FAQs

• Do I need to live on the property? Yes, owner-occupancy required in most localities.
• Can ADUs be sold separately? No, they stay with the primary lot.
• Are ADUs taxable? Yes, as part of property assessment—increases value but may qualify for exemptions.
• Where to start? Contact your local zoning office or contact Maryland MicroNest.